The importance of customer experience to the brand

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The importance of customer experience to the brand



Early last month, Interbrand released its rankings of India’s most valuable brands. But in today’s business scenario are these rankings relevant? Some of the biggest brands in Indian industry are on that list, and yet they are not necessarily brands that customers would associate as the best.

In 2016 brand valuation specialists, Markables,  reported that between 2003 and 2015, the contribution of brand valuation to the total valuation of a company had come down by as much as  50%. In that period the value of customer relationships more than doubled. The study covered mergers & acquisitions over the period and compared the respective values of brands (trademarks) and customer relationships to the total value of the companies.

What this means is that enterprises seeking to merge with or acquire other enterprises now place much greater value on the customer relationships the enterprise has than the value of its brands. The reason for this is simple. In the last decade the prevalence of the internet and social media has given consumers far greater access to information on brands than ever before. For high involvement purchases, customers now research brands in depth before making a purchase decision and feedback from other customers of that brand plays an important role. A negative customer experience can spread virally and severely affect the brand.

Let us leave aside brand valuations as a purely financial measure. Branding and brand managers cannot ignore the importance of customer relationships. Your brand is what it stands for in the market and customers base their expectations from your brand based on its values and its promise. The customer expects every experience he/she has with the brand to live up to that. More than the financial value of your brand is the value of the relationship you have with your customers. If customer experiences are managed well, brands can look forward to longer customer relationships and greater value for the company as a whole. 

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